CORPORATE

GOVERNANCE

PRESENTED BY : VISHAL
JIVANI

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Contents-
• 1.DEFINITION.
• 2.HISTORY.
• 3.PRINCIPLES.
• 4.INTERNAL AND EXTERNAL CORPORATE
GOVERNANCE CONTROLS.
• 5.SYSTEMIC PROBLEMS OF CORPORATE
GOVERNANCE.
• 6.CORPORATE MODELS.

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DEFINITION-
• “Corporate governance is the set of processes, customs,
policies and laws affecting the way in which a corporation is
directed, administered or controlled”
• It also includes the relationship among the stakeholders and
the goals for which the corporation is governed.
• The corporate governance structure specifies the rules and
procedure for making decision on corporate affairs.
• it also provide the structure through which the company
objectives are set.
• It is used to monitor whether outcomes are in accordance
with plans or not.

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HISTORY-
•In 19 century the need for a better corporate governance was felt
th

when-
• Few giant corporation in u.s. collapsed
– e.g. ENRON, WORLD COM, ADELPHIA.
– Few companies of U.K. also witnessed several cases of corporate
corruption and collapse.
 It led to setting of CADBURY(1996), GREEBURY and HAMPEL(1997)
committee

 INDIAN- SCENARIO
 Initial thrust for better corporate governance came in INDIA
mainly due to-
 Due to 1992 stock market scam .
 Onset of international competition resulting from the policy of
liberalisation of economy in 1991

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Cont……
• The confederation of INDIAN industries was the
first to appoint a committee under chairmanship
of Mr.rahul bajaj in 1998.
• It was followed by4 national level committee
• Kumar mangalam birla committee in 1999.
• N.R. Narayana murty committeein 2003
• Gangully committee report in 2002.
• 4th committee appointed by govt. of INDIA known
as report of naresh chandra.

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 PRINCIPLES-
• Key elements of good corporate governance principles
include honesty, trust and integrity, openness,
responsibility and accountability,mutual respect to the
organisation
• Commonly accepted principles of corporate
governance includes-

• TRANSPARENCY
• BOARD- EFFECTIVENESS
• SHAREHOLDERS RIGHT

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• Transparency-
-disclosure of data.
-disclosure of transaction.
 Shareholders right
-right and equitable treatment of shareholders.
-right to vote.
 Board effectiveness
• Role and effectiveness of board.

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Internal and external corporate
governance controls-
• Internal corporate governance controls-
-internal corporate governance controls monitor
activities and take corrective action to accomplish
organisational goals.examples includes-
#Monitoring by board of directors-
#remuneration-
#disclosure-the annual report should contain the
following-
-name of chairman, deputy chairman, CEO & non
executive directors.
-the audit and remuneration committee members.
-the no. of meeting held by the board &no. of directors
attend.
-how board and committee performation evaluaton has
been conducted 8
  External corporate governance
controls-
• Govt. regulations.
• Media pressure.
• Takeovers.
• Competition.

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 SYSTEMIC PROBLEMS OF
CORPORATE GOVERNANCE

• SUPPLY OF ACCOUNTING
INFORMATION.

• DEMAND FOR INFORMATION.

• MONITORING COSTS.
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CORPORATE MODELS
• Generally only two types of corporate models are discussed-
1.Anglo American model-
2.Non Anglo American model-
-e.g. Reliance industries ltd. % holding
1.1 promoters holding 46.68
1.2 institutional investors 28.35
1.3 Indian public 16.56
1.4 others (NRI,OCB,DGDR) 8.40
e.g. WIPRO
1.1 pr0moters 83.95
1.2 institutional investors 3.77
1.3 INDIAN public 7.03
1.4 others (NRI,OCB,DGDR) 5.25

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